Etude 49 EU ETS

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Studies & Research N°49 Sense and Flexibility Striking a Balance between Sovereignty and Harmonisation in the Implementation of the EU ETS Nicole Cosmann, Iain Keith, Kim Klunich, Eric Mehlhoff, Mario López-Acalá, Brandon Lee, Namrata Patodia, Mark Scorsolini (Deputy Manager), Gweneth Thirlwell (Manager), Sheldon Welton (Editor), Makiko Yamazoe Guidance and foreword: Stephen Boucher, Notre Europe Advisor: Pr. Tanya Heikkila The authors The team responsible for this report included 11 members of Columbia University’s MPA Program in Environmental Science and Policy, as part of the programme’s Spring Workshop in Applied Earth Systems Management. Notre Europe commissioned the present survey and analysis. The international team worked under the guidance of Professor Tanya Heikkila, assistant professor in the Department of International and Public Affairs of Columbia’s School of International and Public Affairs and of Notre Europe co-secretary general Stephen Boucher. Notre Europe Notre Europe is an independent research and policy unit whose objective is the study of Europe – its history and civilisations, integration process and future prospects. The association was founded by Jacques Delors in the autumn of 1996 and presided by Pascal Lamy since November 2004. It has a small team of in-house researchers from various countries. Notre Europe participates in public debate in two ways. First, ...

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• Publié par: Nushig
• Nombre de lectures: 123
• Langue: English

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Studies & Research N°49 

Sense and Flexibility

  Striking a Balance between Sovereignty and Harmonisation in the Implementation of the EU ETS  

      Nicole Cosmann, Iain Keith, Kim Klunich, Eric Mehlhoff, Mario López-Acalá, Brandon Lee, Namrata Patodia, Mark Scorsolini (Deputy Manager), Gweneth Thirlwell (Manager), Sheldon Welton (Editor), Makiko Yamazoe     Guidance and foreword: Stephen Boucher,Notre Europe     Advisor: Pr. Tanya Heikkila

 

 

 

 

The authors

The team responsible for this report included 11 members of Columbia University’s MPA

Program in Environmental Science and Policy, as part of the programme’s Spring Workshop in

Applied Earth Systems Management.Notre Europe commissioned the present survey and

analysis. The international team worked under the guidance of Professor Tanya Heikkila,

assistant professor in the Department of International and Public Affairs of Columbia’s School

of International and Public Affairs and ofNotre Europeco-secretary general Stephen Boucher.

 

 

 

Notre Europe

 

 

Notre European independent research and policy unit whose objective is the study of  is

Europe – its history and civilisations, integratio n process and future prospects. The association

was founded by Jacques Delors in the autumn of 1996 and presided by Pascal Lamy since

November 2004. It has a small team of in-house researchers from various countries.

Notre Europe in public debate in two ways. First, publishing internal research participates

papers and second, collaborating with outside researchers and academics to contribute to the

debate on European issues. These documents are made available to a limited number of

decision-makers, politicians, socio-economists , academics and diplomats in the various EU

Member States, but are systematically put on our website.

The association also organises meetings, conferences and seminars in association with other

institutions or partners. Proceedings are written in order to disseminate the main arguments

raised during the event.

 

 

 

 

 

Acknowledgements

 

Our research team would like to thank a nu mber of people without whom this project

would not have been possible. First, than k you to our project advisor at Columbia

University, Professor Tanya Heikkila who has provided invaluable oversight and

guidance every step of the way; and to our project advisor atNotre Europe, Stephen

Boucher, who came up with the original concept of this project and has helped guide

it to fruition.

Also, thank you to all of the respondents toNotre Europe’s online survey and our

telephone interviews—your insight and experiences have been critical in helping us to

understand how the ETS has been transformed over the past year from its theoretical

design to practical administration.

Finally, we are very grateful to the govern ment officials, industry representatives,

Non-governmental organisations, and academics who met with us directly to provide

feedback on our research and its findings. Your input enhanced our knowledge and

enabled us to strengthen our report.

 

 

 

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4 Overall Conclusions

Bibliography

 

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3.5  Registries

3.4  Banking

3.7  Expansion

3.6  Taxation and Accounting of Allowances

3.1  Allocation

3 Findings

3.3  Verification

3.2  Monitoring and Reporting

2.1  Prioritised Programme Elements

2 Key Programme Elements and Criteria

2.3  Key Criteria for Evaluating the EU ETS

2.2  Secondary Programme Elements

1 Introduction

 

1.2 Report Structure

1.1 Research Purpose

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Glossary

Foreword

Acknowledgements

Table of Figures

Performance Evaluation

Overview of Recommendations

Commonly Used Acronyms

Executive Summary

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Table of contents

 

Table of Figures

 

Figure 1. Clearness of Allocation Methodologies, Compared by Member States Using a Broad vs. Medium Definition of Combustion Installations 37  

Figure 2. Installations Agreement/Disagreemen t over Concern of Competitive Disadvantages Arising from Varying Allocation Methodologies 41  

Figure 3. Level of Concern Over Competitive Di sadvantages Arising from Varying Member State   42

Allocation Methodologies, by Size

Figure 4. Installations’ Desired Level of Authority for Allocation Decisions

Table 1. Evaluation of Allocation based on Key Criteria

Figure 5: Perceived Accuracy of Emissions Calculation Methodology

Figure 6. Excessiveness/Sufficiency of Time Invested by Installations in M&R

Figure 7. Sufficiency/Excessiveness of Time Invested in M&R, by Installation Size

Figure 8. Installation’s Ratings of M&R Guidelines’ Clarity

Table 2. Evaluation of M&R based on Key Criteria

Figure 9. Delays in the Verification Process

Table 3. Evaluation of Verification based on Key Criteria

Figure 10. Desired Level of Authority for Ba nking Rules, by Size of Installation

Table 4. Evaluation of Banking Based on Key Criteria

Figure 11. Installations’ Perceptions of Ease of Use of Registries

Table 5. Evaluation of Registries based on Key Criteria

Table 6. Evaluation of Tax and Accounting based on Key Criteria

 

 

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Glossary

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T ERM 

Acid Rain Program

Accreditation 

Advance auctions

Allowance

Allowance Tracking System

Allowance Tracking Workstation

Auctioning 

Banking

Benchmarking 

 

D EFINITION 

The Acid Rain Program is a cap and trade system adopted by the EPA to curtail sulphur dioxide emissions, the primary cause for acid rain.

The procedures and processes used to determine the competence of organisations to verify installations' emissions reports

Advance auction is an auction for allowances that can only be used 7 years later i.e. allowances bought in 1993 could be used only in 2000 and later.

According to the Directive, this means an allowance to emit one tonne of carbon dioxide equivalent during a specified period, which shall be valid only for the purposes of meeting the requirements of the EU ETS Directive and shall be transferable in accordance with the provisions of the EU ETS Directive

A central database for electronic recordkeeping and notification system to track allowance transactions and the status of allowance accounts.

The software used by companies in the SO 2 program to track and project emissions throughout the year, compare emissions to allowance holdings and manage allowance transfers.   

Allocation method for issuing emission permits, or allowances, to emitters and firms, based on a willingness to pay for those allowances.

The process by which allowances not used in a given compliance period may be saved, or "banked" for the following compliance period

The use of a standard representing an equal position for all installations in a sector or subgroup. The standard may be based on an average, BAT or another physical standard of emissions per unit of production

 

 

Broad Definition (of Combustion Installations) 

Burden sharing agreement

Business As Usual projections 

Calculation-based  methods

Carbon Dioxide

Clean Air Act Amendments of 1990

Closure

Community Independent Transaction Log

Competent Authority

Compliance Supplement Pool

This definition, used by a Member State to determine which installations should be required to participate in the EU ETS, includes all combustion installations whether or not they are being used specifically for energy production.

European Union agreement to share the 8% reduction target under the Kyoto Protocol among the EU-15

The prediction of future emissions scenarios based on economic growth and no changes in processes

The process by which projections of what should be emitted are based on the levels of inputs into a system and are subject to the accuracy of input measures (such as fuel). This is in contrast with Measurement Methodologies, which are utilised in the US. Measurement methodologies measure emissions output directly through emissions monitors.

A greenhouse gas whose atmospheric concentrations have been increasing from pre-industrial (1750-1800) levels of 280 parts per million (ppm) to present day levels of 356- 360 ppm, depending on location. CO 2 decreases in summertime when plant productivity consumes CO 2 and increases in winter when biota is less active and respiration exceeds photosynthesis. A main source of CO 2 increase in the atmosphere has been the burning of fossil fuels.

Title IV of the Clean Air Act Amendments of 1990 (CAAA) instituted the Acid Rain program, a cap and trade system to control sulphur dioxide emissions within the United States and reduce emissions by 50% 1980 to 2012

Installation's permanent 100 % cessation of production

The transaction log established under the ETS through which all transactions are communicated, recorded, checked, and completed or rejected as appropriate. It accounts for the issuance, holding, transfer and cancellation of all allowances under the ETS.

The authority designated by a particular Member State as the national administrator of the EU ETS.

A one time upfront allocation of allowances made to units to prevent closure of units and to allow them to phase in to compliance within the NOx Budget Trading Program

 

 

 

 

Continuous Emissions Monitoring System

Directive

Environmental  Protection Agency

EPA NOx Allowance Tracking System

Grandfathering 

Greenhouse gas

Harmonisation 

Installation 

Known New Entrants

Kyoto Protocol

Medium Definition (of Combustion Installations) 

 

A stringent monitoring mechanism adopted within the Acid Rain Program by the EPA, by which sources conducted quarterly reporting of hourly emissions to EPA.

A type of legislation promulgated by the European Parliament and the Council of the European Union that binds member countries to achieve stated objectives within a certain time limit, but allows the national authorities in each country to choose the choice of form and means to be used to meet those objectives. Dire ctives must be implemented in national legislation in accordance with the procedures of the individual member countries.

EPA is the primary federal agency within the US whose mission is to protect human health and the environment

An electronic allowance compliance system set up by the EPA to keep track of the allowances traded through the nitrogen oxide acid rain program

Allocation method by which allowances are allocated according to historical emissions

A gas that absorbs infrared radiation and in turn emits it in the atmosphere. The net effect is a local trapping of energy and a tendency to warm the earth's surface. Water vapour (H 2 0), carbon dioxide (CO 2 ) methane (CH 4 ), nitrous oxide (N 2 O) and ozone (O 3 ) are the primary greenhouse gases in the Earth's atmosphere.

An increase in the standardisation of guidelines or rules

A factory participating in the EU ETS

New installations that begin operation in the middle of an EU ETS phase that were pl anned to be coming into operation at the beginning of the phase

An international treaty designed to address the problems associated with global climate change through legally binding limits on anthropogenic emissions of greenhouse gases.

This definition, used by a Member State to determine which installations should be required to participate in the EU ETS, includes only combustion installations being used specifically for energy production.

 

Member States

National Allocation Plan

National Ambient Air Quality Standards

National Registry

New Entrant Reserve

NOx Budget Trading Program

Opt-in

Opt-out

Phase I

Phase II

Phase III

Pooling

Countries that are members of the European Union

A mandatory provision of Directive 2003/87/EC whereby each Member State has to develop an implementation plan within the EU-wide greenhouse gas trading scheme for determining the total number of allowances that will be distributed to installations covered by the EU ETS.

Within the Clean Air Amendment Act of 1990, National Ambient Air Quality Standards were established for six primary pollutants that were considered harmful to people and the environment

An electronic database set up by each Member State to track emissions transactions between installations covered by the EU ETS.

A predetermined amount of emissions allowances set aside to be allocated to new installations entering a participating sector in the middle of a Phase.

A collaborative effort by the north-eastern states of the US to establish a cap and trade program to curtail nitrogen oxide emissions in the summer months (ozone season)

An ETS provision that allows installations not covered by the Directive to voluntarily participate in the scheme.

The ability of an installation to opt out of the initial phase (Phase I) of the EU ETS ba sed on coverage by country- specific greenhouse gas reduction policies. If there are no "equivalent" policies, installations are required to enter the EU ETS in 2008 (Phase II).

The initial stages of the EU ETS (2005-2007) that is designed to transition Member States into the emissions trading market by developing greenhouse gas emission reductions plans, NAPs, to assist Member States in the implementation of the Kyoto Protocol from 2008-2012.

The EU ETS trading period that links up to the Kyoto Protocol during the 2008-2012 compliance phase.

The post-Kyoto EU ETS tradin g period starting in 2013.

The ability of multiple installations to collectively manage their allowances through a designated authority.

 

 

 

 

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Special Allowance Reserve

Sulphur dioxide

Tiers

Trading sector

Unknown New Entrants

Vintage Allowances

 

Within the Acid Rain Program, 2.8% of the allowances are auctioned annually in spot and advance auctions. This reserve is called the Special Allowance Reserve.

A pollutant from combustion installations that is a principle cause of acid rain and is regulated under the US Acid Rain Program.

Minimum levels of accuracy in measuring and reporting emissions, defined by the size and type of the installation

The population of all trading installations, as defined by the types and size of installations required to participate

New installations that begin operation in the middle of an EU ETS phase that were not known to be coming into operation at the beginning of the phase

Each allowance in the Acid Rain Program specifies a particular year, its “vintage”, in which it is first available to be used to cover SO 2 emissions.

Carbon Dioxide

Clean Development Mechanism

European Cooperation for Accreditation

Eco-Management and Audit Scheme

 

 

Continuous Emissions Monitoring System

 

Nitrogen Oxide

National Allocation Plan

United States

Sulphur Dioxide

European Union Network for the Implementation and Enforcement of Environmental Law

International Emission Trading Association

Monitoring and Reporting

International Transaction Log

Greenhouse Gas

 

European Union

 

 

Emissions Trading Scheme

 

 

EU

ETS

IETA

GHG

CDM

CO 2  

EMAS

CEMS

 

 

EA

 

 

 

 

 

Commonly Used Acronyms

 

 

 

US

BAU

 

Business as Usual

M&R

NAP

NOx

SO 2  

IMPEL

 

 

ITL